Indian SMB market at 48.8 million units growing at a CAGR of 4.53%

Our recently launched study titled, ‘Indian SMB Sector 2013’ captures some interesting facts and figures on the burgeoning SMB segment in India. The study reveals that with a total base of 48.8 million SMBs, India is expected to emerge as the largest SMB country globally.

The SMB sector in India is growing at an exceptional rate and has the potential to be one of the primary drivers of the Indian economy. Today, 1.5 million SMBs export their products or services outside India which is a sign of the sector’s rapid evolution. The sector is expected to be the largest employment generator in the country and today represents the true entrepreneurial spirit of the Indian business community.

The study also highlights that the Indian SMB space today is largely dominated by micro scale businesses which account for 95% of the SMB landscape. This is followed by small scale businesses contributing 4.8%, and the rest 0.2% by medium scale businesses. Out of the 48.8 million SMBs around 55% are located in urban areas whereas rural regions account for the rest 45 %.

SMBs in India have gained strategic importance from both corporations and the government. The recently announced tax incentive for growing SMBs in the Union Budget is one such example. Such initiatives have helped SMBs enhance their competitiveness in the global markets. Globalization in trade is further driving SMBs to improve their efficiency of conducting business.

The study also states that around 82% of all SMBs are situated in 10 states in India. These 10 states, also account for 2/3rd of the mobile and internet subscribers in the country. Additionally, Manufacturing is the single largest vertical at pan India level followed by Repairs & Maintenance, and Services vertical. Greater employee mobility, increased competition and expansion in terms of office locations have further pushed SMBs in India to generate more employment. The study indicates that the Indian SMB sector provides employment to approx. 81.16 million people in India, growing at a CAGR of 5.29%, while the fixed investment has been consistently increasing over the years at 11.48%.

The following are some of the key findings of the study:

ü  India is a hub of 48.8 million SMBs providing employment to 81.16 million individuals

ü  Micro enterprises account for 95% of total SMBs, small & medium put together hold the remaining 5% share

ü  1.5 million Indian SMBs export their products or services globally

ü  55% of SMBs are located out of urban cities whereas 45% are situated in rural areas

Author: Praveen Bhadada, Director, Zinnov

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